Oil price crash has made Nigeria’s economic diversification imperative. With oil price and naira volatility, gradual but steady slump in foreign reserves and drop in federal revenues, among other issues, economists agree that diversifying the Nigerian economy must happen now and must begin with steering the productive sector of the economy with adequate and long-term financing.
The Bank of Industry (BoI) is leading the line in long-term financing of import-substituting manufacturers that have the right technology, capacity to increase investments and create jobs for locals.
In line with the National Industrial Revolution Plan (NIRP) launched by the Federal Government early 2014, the development bank is playing the role of bridging the gap between the real sector and the financial sector to ensure that the country not only produces what the local consumers want (and need) but also exports to other viable markets.
In fulfilling these dreams, BoI has supported two key manufacturers: Momas Electricity Meters Manufacturing Company Limited (Memmcol) and Western Metal Products Company Limited (Wempco).
Momas’ giant strides
Electricity distribution companies (discos) have been having a series of fights with consumers over unavailability of meters. But here is a metering and technological solutions company, supported by BoI, with the capacity to produce pre-paid and post-paid meters that can serve many Nigerians.
When Real Sector Watch visited this firm, located along Lagos/Ibadan Expressway (beside Nasfat), it was observed that all departments and laboratories were manned by experts that took time to explain how the pieces of equipment at the plant worked.
“I have been impressed by the level of technology on display here,” Rasheed Olaoluwa, CEO, BoI, who led the delegation, said after the visit.
“It is the first time this is happening in Nigeria. The key issue is that we have a company in Nigeria owned by a Nigerian or Nigerians that has the capacity to supply almost all the electricity meters we need in this country,” Olaoluwa said.
“For me, it is an industrial policy. I have undertaken on behalf of BoI to help companies that have the capacity to produce what Nigerians need. We do not need to import these things. This is one of the reasons our foreign reserves have been under pressure, because we keep importing what we produce locally,” he observed.
According to him, Momas has designed a very robust billing system that ensures that from their mobile phones, customers can check their balance in the meter, as there is no need to keep importing meters when Momas can produce same here.
“This is the most practical way of creating jobs. This company can have 500 workers but it has only 100. So, you can imagine that the number of staff can increase five-fold if this company is patronised. We have been exporting our jobs to other countries because we are importing goods from there. We need to begin to support our own manufacturers,” Olaoluwa said.
He further said the bank supported Momas with long-terms funds and working capital, adding that the role of the development finance institution was catalytic.
Kola Balogun, managing director, Momas, said the company had the capacity to satisfy local demands to a great extent, as there was also the right technology.
Wempco’s huge industrial space
The iron and steel makers, like manufacturers in other sectors, have not had it easy in recent times. But Real Sector Watch’s visit to Wempco Steel Mill Company Limited, located at Ibafo in Ogun State, revealed that with good management structure, firms can still defy challenges and headwinds and achieve reduction in costs as well as surge in margins.
Wempco processes steel billets into wire rods, which are used for the production of a number of products such as nails, barb wires and wire meshes, among others. The firm is also a big player in the ceramics industry, manufacturing tiles that meet international standards.
The 300,000 tons capacity billet processing plant was commissioned by Goodluck Jonathan, Nigeria’s president, in 2013.
Occupying a large land mass, the firm has world-class infrastructure that is equivalent to what obtains in Asia, Europe, the United States, or any other continent.
Like Momas and other manufacturers, BoI also supported Wempco.
After the tour of the state-of-the-art facility, Olaoluwa, BoI helmsman, said the country was seeing a company making products at the highest quality and standards, saying from his discussions with the company’s managing director, the ex-factory prices were cheaper than those of exports.
“You hear a lot of manufacturers complain about how harsh the environment is, but here is a local manufacturer that has managed to put together all factors of production such that the ex-factory price is cheaper than imports,” he said.
“It gives me a lot of hope that Nigeria is on the right track. The National Industrial Revolution Plan is working and going into the future, a lot more facilities like this will come up to ensure that we become self-sufficient as a country,” he said.
Olaoluwa berated Nigerian businessmen who advise local manufacturers to label products made in the country to appear as if they were made in other countries, saying that the practice was inimical to the country’s economic progress.
“We need to get over this inferiority complex among our citizens. We should be proud and see a product made in the country as our own,” he said.
He said the bank will continue to encourage support for a number of producers so that there will be competition that will translate into making prices cheaper for Nigerians, saying “you are looking at a ceramics tile factory where kaolin is mined from a nearby mining lease in Ogun State. You can see they are international quality tiles and you can design all kinds of things there and even put your name on them.”
Olaoluwa further pointed out based on a United Nations Economic Commission for Africa 2013 report, which advocates commodity-based industrialisation, the country was now using what was locally available to produce what it can use.
On his part, Tung Robert, managing director, Wempco, said the company had between 13,000 and 14,000 workers, saying ex-factory prices were 5 to 10 percent cheaper than imports.
One secret of the firm is that it has good management and sources its raw materials locally, Robert said, saying BoI has been helpful to achieving the dreams of the company, as the firm sources 95 percent of raw materials for ceramics locally, while over 90 percent of inputs for steel.
“We have always had the idea of looking more and more inwards. We have hug natural and human resources in the country and the market is huge. Opportunities are here, so there is nothing we want to achieve that we cannot,” Robert, who said the company had been in the country for 50 years, said.
Real Sector Watch observed that with much more financial support and, more importantly, protection from imports, Wempco can help drive Nigeria’s industrialisation dream through the iron, steel and ceramics industries.
ODINAKA ANUDU
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